Dutch Drilling Company Pays Brazil $342 Million in Corruption Settlement

Cinnaminson, NJ- Netherlands-based drilling company SMB Offshore NV has reached a $342 million settlement with state-owned Petroleo Brasileiro SA (Brazilian Petroleum SA) following a near-complete investigation into corruption allegations. Though at the time of the settlement no conclusive evidence was found, Brazilian investigators did find “red flags” in the Dutch driller’s business history- namely a $240 million settlement in the Netherlands in 2014 for confirmed allegations of bribery in Brazil, Angola, and Equatorial Guinea. While Brazil will receive $149 million of the settlement, $196 million will be paid off via a 95% discount SMB is required to give for contracted work.

Prosecutors in Brazil and state-owned oil company Petróleo Brasileiro SA signed a settlement agreement Friday with Netherlands-based oil and gas services firm SBM Offshore NV to resolve allegations of corruption.

Under the so-called leniency agreement, SBM will pay Petrobras $342 million through a combination of a cash penalty and discounts on future work.

In late 2014, SBM paid $240 million to Dutch authorities to settle allegations that it bribed government officials in Angola, Brazil, and Equatorial Guinea.

The U.S. Justice Department dropped an investigation into the company when the Dutch settlement was announced.

The company said an internal investigation in 2014 found “certain red flags” in Brazil but “did not find any credible evidence that the company or the company’s agent made improper payments to government officials (including state company employees).”

In January this year, SBM Offshore’s chief executive, Bruno Chabas, and supervisory board member Sietze Hepkema reached an out of court settlement with Brazil authorities for the Petrobras corruption probe. The executives paid small fines and didn’t admit guilt.

In Friday’s settlement, SBM agreed to pay a cash penalty of about $163 million. Petrobras will receive about $149.2 million from that amount. About $13.6 million will be allocated to government enforcement agencies for anti-corruption programs.

SBM will also give Petrobras a 95 percent price reduction on bonus payments for work over the period 2016 to 2030. The reduction has a nominal value of $179 million and a present value of about $112 million, according to the parties.

They jointly announced the settlement Saturday. It allows SBM to bid for new Petrobras contracts.

When the two executives, Chabas and Hepkema, agreed to settle their cases with penalties of about $60,000 each, SBM said it supported them and would pay their fines.

The company said then the executives’ settlement didn’t involve an admission of guilt and the accusations of corruption were without merit.

SBM provides floating production systems for the oil and gas industry. Petrobras is one of its biggest customers.

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